SPROTT RESOURCE HOLDINGS INC T.SRHI

EARLY WARNING REPORT

[mrsgoldminer]

1SEDAR Early Warning ReportSEDAR Early Warning Report
EARLY WARNING REPORT
(Form 62-103F1)
Made Pursuant To
NATIONAL INSTRUMENT 62-103
The Early Warning System and Related Take-Over Bid and
Insider Reporting Issues
Item 1. – Security and Reporting Issuer
1.1 State the designation of securities to which this report relates and the name and
address of the head office of the issuer of the securities.
Securities: Common shares (“Shares”) and common share purchase warrants
(“Warrants”) of the Corporation
Issuer: Sprott Resource Holdings Inc. (the “Corporation”)
Suite 2600, South Tower, Royal Bank Plaza, 200 Bay Street
Toronto, Ontario M5J 2J1
1.2 State the name of the market in which the transaction or other occurrence that
triggered the requirement to file this report took place.
Not applicable. See item 2.2.
Item 2 – Identity of the Acquiror
2.1 State the name and address of the acquiror.
Sprott Inc. (“Sprott”)
Suite 2700, South Tower, Royal Bank Plaza, 200 Bay Street
Toronto, Ontario M5J 2J2
Sprott Inc. is a global alternative asset manager with three primary lines of business:
exchange listed products, alternative asset management and private resource investments.
Sprott is listed on the Toronto Stock Exchange under the symbol “SII”.
2.2 State the date of the transaction or other occurrence that triggered the requirement
to file this report and briefly describe the transaction or other occurrence.
On February 9, 2017, the Corporation announced the completion of a plan of
arrangement under the Canada Business Corporations Act (the “Arrangement”)
pursuant to which Sprott Resource Corp. (“SRC”) became a wholly-owned subsidiary of
the Corporation and holders of common shares of SRC (“SRC Shares”) received three
Shares for each SRC Share held. In connection with the Arrangement, Sprott, a fund
managed by a subsidiary of Sprott, and Term Oil Inc. (a corporation controlled by Arthur
Richards (Rick) Rule IV, Chairman of Sprott US Holdings Inc.) invested, concurrently
with the closing of the Arrangement, an aggregate of $15 million in the Corporation by
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purchasing a combination of Shares and Warrants (the “Private Placements” and
collectively with the Arrangement, the “Transactions”). As a result of the Transactions,
Sprott acquired direct ownership of an aggregate of 47,931,755 Shares, and indirect
ownership of 21,750,000 Warrants. Term Oil Inc. acquired ownership of 4,000,000
Shares and 4,000,000 Warrants. In addition, certain managed accounts of Resource
Capital Investments Corp., Sprott Global Resource Investments Ltd. and Sprott Asset
Management USA Inc. (collectively, the “Sprott Managers”) hold 16,208,500 Shares
and 16,000,000 Warrants. (This is a late filing of the early warning report.)
2.3 State the names of any joint actors.
Term Oil Inc., Resource Capital Investments Corp., Sprott Global Resource Investments
Ltd. and Sprott Asset Management USA Inc.
See item 2.2.
Item 3 – Interest in Securities of the Reporting Issuer
3.1 State the designation and number or principal amount of securities acquired or
disposed of that triggered the requirement to file the report and the change in the
acquiror’s securityholding percentage in the class of securities.
47,931,755 Shares and 21,750,000 Warrants representing 9.39% of the issued and
outstanding Shares on a non-diluted basis, and 13.09% on a partially diluted basis
assuming exercise of the Warrants. Prior to the Transactions, Sprott did not own any
securities of the Corporation.
3.2 State whether the acquiror acquired or disposed ownership of, or acquired or ceased to
have control over, the securities that triggered the requirement to file the report.
Sprott acquired ownership, directly and indirectly, of 47,931,755 Shares and 21,750,000
Warrants pursuant to the Transactions. See item 2.2.
3.3 If the transaction involved a securities lending arrangement, state that fact.
Not applicable.
3.4 State the designation and number or principal amount of securities and the acquiror’s
securityholding percentage in the class of securities, immediately before and after the
transaction or other occurrence that triggered the requirement to file this report.
Prior to the Transactions, Sprott did not own any securities of the Corporation.
After the Transactions, Sprott, directly and indirectly owns 47,931,755 Shares and
21,750,000 Warrants representing approximately 9.39% of the issued and outstanding
Shares on a non-diluted basis, and 13.09% on a partially diluted basis assuming exercise
of the Warrants.
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3.5 State the designation and number or principal amount of securities and the acquiror’s
securityholding percentage in the class of securities referred to in Item 3.4 over which
(a) the acquiror, either alone or together with any joint actors, has ownership and
control,
Sprott, directly and indirectly owns 47,931,755 Shares and 21,750,000 Warrants
representing approximately 9.39% of the issued and outstanding Shares on a nondiluted
basis, and approximately 13.09% on a partially diluted basis assuming
exercise of the Warrants. See item 2.2.
Term Oil Inc. owns 4,000,000 Shares and 4,000,000 Warrants.
The Sprott Managers exercise direction and control over 16,208,500 Shares and
16,000,000 Warrants.
Sprott, Term Oil Inc. and the Sprott Managers, together, beneficially own or
exercise direction and control over 68,140,255 Shares and 41,750,000 Warrants,
representing 13.35% of the outstanding Shares on a non-diluted basis and
approximately 19.9% on a partially diluted basis assuming exercise of the
Warrants.
(b) the acquiror, either alone or together with any joint actors, has ownership
but control is held by persons or companies other than the acquiror or any
joint actor, and
Not applicable.
(c) the acquiror, either alone or together with any joint actors, has exclusive or
shared control but does not have ownership.
Not applicable.
3.6 If the acquiror or any of its joint actors has an interest in, or right or obligation
associated with, a related financial instrument involving a security of the class of
securities in respect of which disclosure is required under this item, describe the
material terms of the related financial instrument and its impact on the acquiror’s
securityholdings.
Not applicable.
3.7 If the acquiror or any of its joint actors is a party to a securities lending arrangement
involving a security of the class of securities in respect of which disclosure is required
under this item, describe the material terms of the arrangement including the duration
of the arrangement, the number or principal amount of securities involved and any
right to recall the securities or identical securities that have been transferred or lent
under the arrangement.
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State if the securities lending arrangement is subject to the exception provided in
section 5.7 of NI 62-104.
Not applicable.
3.8 If the acquiror or any of its joint actors is a party to an agreement, arrangement or
understanding that has the effect of altering, directly or indirectly, the acquiror’s
economic exposure to the security of the class of securities to which this report relates,
describe the material terms of the agreement, arrangement or understanding.
Not applicable.
Item 4 – Consideration Paid
4.1 State the value, in Canadian dollars, of any consideration paid or received per security
and in total.
Sprott paid $0.233 per Share for 42,918,455 Shares for an aggregate purchase price of
$10,000,000. See also item 4.3.
4.2 In the case of a transaction or other occurrence that did not take place on a stock
exchange or other market that represents a published market for the securities,
including an issuance from treasury, disclose the nature and value, in Canadian
dollars, of the consideration paid or received by the acquiror.
See item 2.2.
4.3 If the securities were acquired or disposed of other than by purchase or sale,
describe the method of acquisition or disposition.
In connection with the Arrangement, Sprott exchanged 1,671,100 common shares of SRC
for 5,013,300 Shares. Sprott Resource Consulting LP, a wholly-owned subsidiary of
Sprott, received 21,750,000 Warrants in exchange for foregoing certain profit
distributions under a partnership agreement with SRC. See also item 4.1.
Item 5 – Purpose of the Transaction
State the purpose or purposes of the acquiror and any joint actors for the acquisition or
disposition of securities of the reporting issuer. Describe any plans or future intentions which
the acquiror and any joint actors may have which relate to or would result in any of the
following:
(a) the acquisition of additional securities of the reporting issuer, or the
disposition of securities of the reporting issuer;
(b) a corporate transaction, such as a merger, reorganization or liquidation,
involving the reporting issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of the assets of the reporting issuer or
any of its subsidiaries;
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(d) a change in the board of directors or management of the reporting issuer,
including any plans or intentions to change the number or term of directors or
to fill any existing vacancy on the board;
(e) a material change in the present capitalization or dividend policy of the
reporting issuer;
(f) a material change in the reporting issuer’s business or corporate structure;
(g) a change in the reporting issuer’s charter, bylaws or similar instruments or
another action which might impede the acquisition of control of the reporting
issuer by any person or company;
(h) a class of securities of the reporting issuer being delisted from, or ceasing to
be authorized to be quoted on, a marketplace;
(i) the issuer ceasing to be a reporting issuer in any jurisdiction of Canada;
(j) a solicitation of proxies from securityholders; and/or
(k) an action similar to any of those enumerated above.
The Shares and Warrants were acquired for investment purposes. Sprott, has a long-term view of
the investment and may acquire additional securities either on the open market or through private
acquisitions or sell the securities either on the open market or through private dispositions in the
future depending on market conditions, reformulation of plans and/or other relevant factors.
Sprott currently has no other plans or intentions that relate to, or would result in the matters listed
in clauses (a) to (k), above. Depending on market conditions, general economic and industry
conditions, the Corporation’s business and financial condition and/or other relevant factors,
Sprott may develop such plans or intentions in the future.
Item 6 – Agreements, Arrangements, Commitments or Understandings With Respect
to Securities of the Reporting Issuer
Describe the material terms of any agreements, arrangements, commitments or
understandings between the acquiror and a joint actor and among those persons and any
person with respect to securities of the class of securities to which this report relates,
including but not limited to the transfer or the voting of any of the securities, finder’s fees,
joint ventures, loan or option arrangements, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies. Include such information for any of the securities that
are pledged or otherwise subject to a contingency, the occurrence of which would give
another person voting power or investment power over such securities, except that
disclosure of standard default and similar provisions contained in loan agreements need not
be included.
The closing of the Transactions was disclosed by the Corporation in a press release issued on
February 9, 2017. Sprott acquired 5,013,300 Shares pursuant to the Arrangement. Sprott entered
into a subscription agreement to acquire 42,918,455 Shares under the Private Placements. See
also item 2.2.
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Item 7 – Change in material fact
If applicable, describe any change in a material fact set out in a previous report filed by the
acquiror under the early warning requirements or Part 4 in respect of the reporting issuer’s
securities.
Not applicable.
Item 8 – Exemption
If the acquiror relies on an exemption from requirements in securities legislation applicable
to formal bids for the transaction, state the exemption being relied on and describe the facts
supporting that reliance.
Not applicable.
Item 9 – Certification
The acquiror must certify that the information is true and complete in every respect. In the case
of an agent, the certification is based on the agent’s best knowledge, information and belief but
the acquiror is still responsible for ensuring that the information filed by the agent is true and
complete.
This report must be signed by each person on whose behalf the report is filed or his authorized
representative.
It is an offence to submit information that, in a material respect and at the time and in the light
of the circumstances in which it is submitted, is misleading or untrue.
Certificate
I, as the acquiror, certify, or I, as the agent filing the report on behalf of an acquiror, certify to
the best of my knowledge, information and belief, that the statements made in this report are true
and complete in every respect.
Date: March 24, 2017.
SPROTT INC.
“Arthur Einav”
Arthur Einav
General Counsel